ZAGREB: Croatia’s opposition and media demanded yesterday Deputy Prime Minister Damir Polancec step down after police arrested managers of a leading food group where he used to work on suspicion of illegal share dealings.

Police arrested six people on Wednesday, including four former and current Podravka executives, accused of involvement in a plan by managers to take over Podravka by buying shares with company funds over the past three years. The opposition, led by the Social Democrats, demanded a vote of confidence in parliament for Polancec, who is also economy minister and was a manager at Podravka before joining the government four years ago.

He left the company before the suspected illegal share activity took place.REUTERS

Croatia hopes to wrap up European Union entry talks in 2010, but is under pressure from Brussels to step up its fight against corruption and organised crime.

Polancec told a news conference on Wednesday he had no plans to quit. “All I can and want to say is that (legal) institutions must be allowed to do their work,” he said.

Polancec declined to comment specifically on Podravka and was not available for further comment on Thursday.

“The poor situation in shipbuilding and the mismanagement of Podravka are the reasons why Polancec should resign,” the opposition said.

Polancec is overseeing the privatisation of the loss-making shipyards, which have piled up huge debt and face bankruptcy unless they are sold or the government agrees to pump in fresh capital, which would be contrary to European Union rules.

The EU has said Croatia must sell the shipyards or make them profitable to meet the EU’s competition standards.

“Polancec must quit now!” the wide-selling Vecernji List said on its front page.

Popular daily Jutarnji List said Prime Minister Jadranka Kosor should sack him as soon as possible. “That is the only way to control the damage caused by the arrests. The deputy prime minister has been highly compromised on several fronts.”

It was not immediately clear if and when parliament, in which the ruling conservative HDZ party has a solid majority, would vote.

Podravka, which makes powdered food, popular Vegeta seasoning, soups and children’s foods, is 26.5 percent owned by the state and is the main employer in northern Croatia. Its shares were down 2 percent in morning Zagreb trade.